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Borrowing for a home has become much more expensive in just a few months

Borrowing for a home has become much more expensive in just a few months

At the beginning of this year, the rate people paid when they took out a fixed-rate loan through Immotheker Finotheker with a bank the broker worked with was on average 1.60 percent if they borrowed between 80 and 100 percent of the value of their property. Today it is already 2.59 percent. It’s been more than five years since mortgage interest rates were so high.

In just a few months, borrowing became more expensive. A loan of €200,000 over twenty years leading to a monthly installment of €973.24 at an interest rate of 1.60 percent. At a rate of 2.59 per cent, that is 1,065.64 euros already. At the end of the term, the borrower will now have paid a total of €55,752.93 in interest. Whoever got the same loan a few months ago got it at an interest rate of €33,578.09. That’s no less than 22,174.84 euros.

But higher interest rates is not a good thing for the Belgian state. Ten-year government bond yields rose to 1.40 percent for the first time since September 2014.

However, historically, interest rates are still very low,” said Jean Depot, director of the debt agency. In November 2011, the interest rate on 10-year government bonds was 4.95 percent. Rather, it reached in February 1990 to 10.61 percent.

“We are also seeing a sharp rise in interest rates in other countries,” says KBC Chief Economist Hans Deutschter. “Thus, financial markets anticipate the rate hike that the European Central Bank will likely start implementing gradually at the end of this year.”

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